Lithuania is attractive investment location to German business

Wednesday, May 24, 2017

According to the German-Baltic Chamber of Commerce (AHK) economic survey 2017, Lithuania is one of the best locations in Central and Eastern Europe. Companies in Lithuania want to invest more and expect they will need more staff. However, increasing wage costs are expected. The scores for the fight against corruption, transparency of procurement and the availability of skilled workers slightly dampen the positive mood, German-Baltic Chamber of Commerce informed in a press release.

A total of 1,734 companies took part in the survey, of which 170 were in the Baltic States. The transparency of procurement and the fight against corruption and criminality, as well as labour costs and academic training, were rated more poorly than last year. “The majority of companies are happy with the economic situation and 85 per cent of companies would choose Lithuania again,” explains Florian Schröder, Chief Executive Officer of the AHK. “Whether the expected 10 per cent wage cost increases will influence this in the future remains to be seen.”

The picture in Lithuania looks very positive. The new government’s plans for reform have had a positive impact. The rating for access to public funds and the quality of local suppliers turned out to be more positive than last year. Four per cent think the current government’s measures are very good, 14 per cent think they are good and 50 per cent of companies are happy with them. The government did not receive a “very good” last year. At 2.98, the vocational training system in Lithuania did better than the CEE average (3.35) and has improved slightly compared with the previous year. 86 per cent say that the practical component of vocational training could do with increasing. The majority of those asked therefore favour the German model of 70 per cent practical and 30 per cent theory. Digitisation within industry (Industry 4.0) is important for one in two companies taking part, of which 81 per cent would invest in this area.

Economic situation

73 per cent of companies in Lithuania are expecting an increase in turnover this year. 55 per cent of companies expect exports to increase – 11 percentage points more than in 2016. None of the companies asked in Lithuania believe export figures will fall. 49 per cent believe they will require more staff. This figure is particularly striking because it represents a 16 per cent increase compared with 2016.

Lithuania is becoming an attractive investment location. So while half of local businesses want to invest more, the country is also becoming more attractive to international investors. In April, the German firm HELLA, a world-leading supplier to the automotive industry, announced plans to build a new plant in Kaunas with an initial investment of EUR 30 million. It is due to open in the middle of next year and will initially create 250 jobs.

Hella says, “We chose Lithuania because the country won us over with highly skilled workers, its good infrastructure and business-friendly climate. We have found a long tradition of mechanical and general engineering here, which is a good basis for building up our manufacturing plant.”

The AHK annual survey, which was conducted from 1 February to 1 March 2017 in Estonia, Latvia and Lithuania, is part of the international economic survey of chambers of commerce abroad located in Central and Eastern Europe (CEE). A rating for the situation in each country and a mutual assessment of the location criteria were recorded in these countries and compared with other countries.